UniCredit Raises Profit Outlook and Payouts

By Valentina Za

MILAN (Reuters) – UniCredit raised its profit outlook on Wednesday, announcing plans to pay out half of its net income to investors in cash next year, after posting a higher-than-expected net profit for the third quarter.

UniCredit, Italy's second-largest bank by assets, awaits supervisory approval to become the main investor in German rival Commerzbank (ETR:CBKG). Commerzbank reported a smaller-than-expected drop in third-quarter income on Wednesday.

"During the quarter, we deployed some of our excess capital and made a strategic investment in Commerzbank, which may or may not eventually lead to a full combination," said CEO Andrea Orcel in a statement.

UniCredit reported a net profit of 2.51 billion euros for the July-September period, surpassing the average forecast of 2.27 billion euros ($2.48 billion) in a company-compiled consensus.

The bank raised its 2024 profit target to over 9 billion euros, up from 8.5 billion euros, and pledged to replicate these results in 2025 and 2026 while boosting shareholder returns.

Starting in 2025, UniCredit will raise its cash payout ratio to 50% of net profit from the current 40%. Orcel has prioritized share buybacks, noting that shareholders favor this form of return.

Revenue in the third quarter edged down 3% compared to the previous period but rose annually by the same percentage, totaling 6.1 billion euros, which slightly exceeded analysts’ expectations driven by strong net interest income.

($1 = 0.9158 euros)